Getting the best deal from a wreck

Car write-offs can be massive administrative hassles. But as Emma Lunn explains, they can be turned to you financial advantage.


There might be a better home for your old wreck
(Image credit: Peter Vahlersvik)

If you've been involved in a bad crash there is a strong chance that you may never see your car again: every day more than 1,000 cars are deemed write-offs by their insurance companies. They will either never be roadworthy again or they cost more to fix than the insurer reckons they are worth, so they'd prefer to send you a cheque to replace your wreck than pay up to repair it.

On the face of it that is perfectly sensible. The problem is in the calculation of what exactly the car is "worth". The Financial Ombudsman regularly deals with complaints from people who believe that their insurer has not properly valued their car after it has been damaged. So if your insurer tells you your car is a write-off, whatcan you do?

First find out what category of write-off you have. There are four. Category A is reserved for the most severely damaged cars the ones on their way to the scrap yard. Category B cars are nastily damaged, but can often be broken up for spare parts. Neither category A nor B cars should end up back on the road. Ever. Category C cars could, in theory, be repaired, but the costs would exceed the pre-accident value of the vehicle. Category D cars can also be repaired and made roadworthy again, possibly for less than they cost of replacing them, but the insurer still deems the cost of repair too high relative to the car's value to bother with.

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"With sophisticated electronics, on-board computers and airbags, even after what might seem a relatively minor crash, modern cars can be complex and expensive to repair," explains Matt Oliver, spokesperson for Gocompare Car Insurance. "If a garage estimates that the cost of repairing a car is a significant proportion of its value, then the car's insurer may decide that it is a write-off."

Next, whatever category you fall into, at the very least challenge the price your insurer offers you. Its estimate of the car's market value (including depreciation and mileage) in the minute before the crash is very unlikely to be the same as yours. So check price guides such as Parker's or Glass's to give you a sense of what replacing your car will really cost you and let your insurer know if the car has just been serviced or has new tyres, for example. These things should be reflected in the final deal if you feel they aren't, get in touch with the Financial Ombudsman (you won't be the first).

Finally, if your car is a C or D category write-off, think about asking to buy it back from your insurer. Once they have settled your claim the car belongs to them. They have to get rid of it why not to you? Get it checked by your own mechanic so you can be sure of the cost of fixing it (cosmetic damage can hide real damage to the frame), check the market to see if the cost of your annual cover will change if you are driving a C or D car (some up premiums for them) and then get ready to negotiate.

The only problem will come if you decide to sell the car later you will have to disclose its C/D status and this may bring down the price you get then. However, if this doesn't bother you, with a bit of luck you could end up with the insurer's cheque, your own car and a repair bill that leaves a little over to compensate you for the admin horrors car crashes bring.

In the news

Grandparents need to be careful if they are taking the kids on holiday over the summer, warns David Byers in The Times. Most travel insurance policies only cover children to travel with people who live at the same address, and thousands of underage travellers may not be insured as a result. Grandchildren should be added to your own travel insurance policy before you go, or parents should take out group insurance policies.

Other gaps in cover to watch out for include the new anti-terror rules banning electronic devices from the cabin on flights to Turkey, Lebanon, Egypt, Saudi Arabia, Jordan and Tunisia. If your device is placed in the hold and damaged or stolen as a result, you're unlikely to be covered.

Graduates who have paid off their student loans are still seeing as much as £300 a month taken from their pay packets by the Student Loans Company (SLC), says Miles Brignall in The Guardian. Graduates are struggling to get the SLC to send a stop'' notification to their employer after the debt has been cleared. Some have overpaid by as much as £3,000. The SLC says it is now writing to everyone who is within 23 months of paying off their loan and inviting them to opt into the Prevent Over-Repayment Scheme, which ensures that direct debit repayments stop when their loan is repaid.

Self-employed workers are being left behind when it comes to saving for retirement, says Holly Thomas in The Times. Research has revealed that almost three-quarters aren't making any private pension contributions, and the few that are aren't paying in enough. The research by Drewberry has revealed that only 27% of self-employed workers are saving for retirement and the vast majority of those (91%) are contributing 10% or less to their pension. A government review has suggested that auto-enrolment should be extended to include the self-employed. One problem at present is that many self-employed people assume that carrying on working or selling their business will fund their retirement. "Ideally, self-employed people should save up to 20% of their earnings," says Thomas.

Emma Lunn

Emma Lunn is a multi-award-winning journalist who specialises in personal finance and consumer issues. With more than 18 years’ experience in personal finance, Emma has covered topics including mortgages, first-time buyers, leasehold, banking, debt, budgeting, broadband, energy, pensions and investments. Emma’s one of the most prolific freelance personal finance journalists with a back catalogue of work in newspapers such as The Guardian, The Independent, The Daily Telegraph, the Mail on Sunday and the Mirror. As a freelancer she has also completed various in-house contracts at The Guardian, The Independent, Mortgage Solutions, Orange and Moneywise. 

She also writes regularly for specialist magazines and websites such as Property Hub, Mortgage Strategy and She’s particularly proud of her work writing about the leasehold sector and a Guardian front-page story about a dodgy landlord. She has a real passion for helping people learn about money – especially when many people are struggling to get by in today’s challenging economic climate – and prides herself on simplifying complex subjects.